The Veritas Sale: Why It’s a Good Omen for Symantec’s Growth



The Veritas sale will inject much-needed cash into Symantec

In the prior parts of this series, we looked at Symantec’s (SYMC) sale of Veritas to The Carlyle Group, which has contributions from GIC Private Limited, Singapore’s sovereign wealth fund. Carlyle has agreed to pay $8 billion for Veritas. Symantec acquired Veritas for $13.5 billion in 2005.

After paying taxes of ~20% on the $8 billion, Symantec will likely receive approximately $6.3 billion in net cash from the Veritas sale. The sale will provide Symantec with some much-needed cash, which could be a relief to investors and shareholders.

In its fiscal 1Q16 earnings release, Symantec announced a $1.5 billion increase in its share buyback program. It will also continue its $0.15 quarterly dividend program.

With share buybacks and dividends, Symantec expects to return about 120% of its after-tax domestic cash proceeds from the Veritas sale to its shareholders in the next year and a half.

In the above graph, you can see that in 2014, 20 US corporations, including Symantec, HP (HPQ), and eBay (EBAY), announced or completed deals to split themselves up. That’s more than in the last three years combined.

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Symantec is pushing for big data analytics space

In its recent 1Q16 earnings release, Symantec stated that it intends to focus on the big data analytics space, an area in which Symantec seems to be very active in the past few months. In January 2015, Symantec acquired Narus, Boeing’s (BA) cybersecurity unit, to bolster its big data capabilities. Narus’s specialty is its Internet-filtering software for intelligence agencies. This will help Symantec prevent, detect, and rectify cyberattacks in the big data analytics space.

If you’re interested in Symantec, you can invest in the PowerShares QQQ ETF (QQQ). QQQ invests about 0.32% of its holdings in Symantec.


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